Caught between Tuesday's election results and Friday's unemployment numbers, the White House faces increased pressure to slow spending next year but also to produce more Main Street jobs to match Wall Street’s recovery.

W.H. feels pressure on jobs, spending

Caught between Tuesday’s election results and Friday’s unemployment numbers, the White House faces increased pressure to slow spending next year but also to produce more Main Street jobs to match Wall Street’s recovery.

Going into the 2011 budget cycle, the administration now appears on course to impose close to a freeze on new discretionary appropriations after the double-barrel increases in 2009 and 2010. The costs of the Afghanistan war are a wild card, but even before the polls closed Tuesday, White House Budget Director Peter Orszag was talking up deficit reduction in New York, and his earlier guidance to agencies calls for alternatives that assume a freeze at 2010 funding levels, or a 5 percent reduction.

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Republicans warn that President Barack Obama can’t ignore what they see as Tuesday’s backlash against the “overspending” and “overgovernment” in his first year in office. “The Obama administration would do well not to underestimate the intensity of voter opinion on these issues — or the impact they have on independent voters,” Republican pollster Neil Newhouse told POLITICO.

Matched against this sentiment is the increased frustration among Democrats over the jobs outlook — and a continued stalemate with the White House over funding for highway construction.

The Labor Department released new monthly numbers Friday showing unemployment now reaching 10.2% — the highest level in more than 25 years.

To help the jobless through the holidays, Congress sent Obama a bill Thursday that would add up to 20 weeks in assistance for those who have exhausted their unemployment benefits. But the future of the highway program, hurt by a drop-off in gasoline tax revenues, remains a bone of contention.

The White House has said it wants to extend the current program only through the 2010 elections and then address increased funding. But 15 states are already so short of cash they can’t meet their 20 percent matching requirement. And that number could double next year — greatly reducing the chance to let contracts and create jobs.

House Transportation and Infrastructure Committee Chairman James Oberstar (D-Minn.) has argued for an upfront investment of $80 billion over two years to get over this hurdle.

“The concrete is cracking,” Oberstar said, laughing, hinting that the administration’s resistance is weakening. And though he denies any role in the discussions, White House chief of staff Rahm Emanuel keeps popping up in conversations, drawn into the fray through his ties to old House colleagues, seen in the gym or at dinner.

The big question is where the money will come from. Rep. Steve LaTourette (R-Ohio) said he is prepared to round up 30 Republican votes for a plan tapping unspent stimulus funds — an idea that he said had been discussed by Emanuel with an old Chicago friend, Rep. Jerry Costello (D-Ill.). House Appropriations Committee Chairman Dave Obey (D-Wis.) said he knew nothing of this approach and would oppose it — leaving others to look for revenues.

House Majority Whip Jim Clyburn is most insistent on action requiring some give from the White House.

“I’ve told the administration, I don’t care who says it, that [it] is absolutely wrongheaded,” the South Carolina Democrat told POLITICO. “We have to reauthorize that highway bill for at least four years. I would prefer five or six,” Clyburn said, even if it meant imposing a securities transaction tax on the financial community to cover the costs.

“Where are the shared contributions to all this? If you’re sitting there on Wall Street, if you’re Goldman Sachs, if you’re making all this money, if you got all this federal money [in a] bailout, and you are paying all these big bonuses to your folks, where is your contribution to this recovery? That’s why it’s painless.”